LINKS

Sunday, 1 October 2017

The 5 best housing loans right now

A
number of readers have been asking me about housing loans lately, so I thought
I'd touch on this topic today. I'm generally more inclined towards bank loans
at this point in time (and have been since I highlighted it here in 2016),
given how they're mostly cheaper given the low interest rate environment we're
in right now.

(I’m in the
midst of writing another article comparing the pros and cons of getting a HDB
vs. bank loans, so you can keep an eye out for that if it has been an issue
weighing on your minds as well.)

In the
meantime, this article is for those of you who have been asking me which bank
loans to look at in 2017.

Background: What you need to know about interest rate
packages

There are several banks in Singapore offering home loans at similar, yet varying interest rates. Fixed rate packages and floating rate packages are the two most popular rate offerings prevalent in the market. As the names suggest, a fixed rate package involves fixed repayments on a monthly basis for a specific period of the loan, while a floating rate package is subject to slight variations in interest rate throughout the loan tenure due to market and economic fluctuations.

If you’re looking for a home loan in Singapore, arriving at the best deal can be quite an effort, especially when the competition is stiff. Banks use various means, including periodic promotions on interest rates, to lure borrowers and augment their market share. With the steep increase in the number of borrowers, banks are frequently adjusting their offerings to lure more customers. This generally means good news for us.

Let’s check out what different banks have to offer and figure out the best housing loan deals for buying private property in Singapore.

Here are the 5 best bank loans for housing right now

1. DBS Home Loan

One of the most
attractive features of the DBS Home Loan is that you can benefit from an
interest rate ceiling on the floating rate package, for a 2-year period. The
floating rate package is pegged to the DBS 9-month FD interest rate (FHR9). For
the first two years of the tenure, your floating rate of interest would be
below 1.72% p.a. Under the promotional floating rate package, you can expect an
interest rate of FHR9+1.07%. FHR9 currently stands at 0.25%.

The floating rate
currently stands at FHR9+1.55% p.a. The fixed interest rate package comes with
an interest rate of 1.68% p.a. for the first 3 years.

Besides, you can choose
a tenure of your choice and also get preferential rates if you have an existing
relationship with the bank.

2.
HSBC Home Loan

HSBC offers a
SIBOR-pegged rate package and a 2-year fixed interest package. SIBOR-pegged
loan rates depend either on 1-month SIBOR or 3-month SIBOR – which are
currently at 1% and 1.124% respectively. These rates are updated by the ABS
every day, so you can check them for yourselves.

For buying a new
property – whether under construction or completed – HSBC Home Loan comes with
SIBOR packages of SIBOR + 1% p.a. for personal banking customers. Advance and Premier
Banking customers can have it at lower rates, though. HSBC doesn’t disclose its
fixed rate package on its website, but I reckon it is likely to be around 2% to
2.2% p.a. going by the current trend.

Up to 30 September 2017,
the bank is running a home loan promotion where they’re offering SIBOR-pegged
package for loans of S$800,000 or more at SIBOR + 0.52% p.a. (1.52% currently),
and the 2-year fixed rate package at 1.52% for the first two years. Though
essentially this is the same rate for now, SIBOR keeps fluctuating, albeit
slightly, so future rates are likely to keep varying. The rate for the
SIBOR-pegged package from 3rd year onwards is SIBOR + 0.75%, and for fixed rate
package is SIBOR + 0.75% for the third year and SIBOR + 1% from the 4th year
onwards.

OCBC has four different
interest rate packages to offer for buying a house. Two of the package
offerings are fixed rate offerings, one is variable, and the other is dependent
on SIBOR.

In the fixed-deposit
linked rate offering, the interest is pegged at 1.4% for the first year, and
1.5% subsequent to that for the duration of the loan. The rate is basically
adjusted in accordance with OCBC’s 15-month fixed deposit interest rate.

The second rate package
is a short-term fixed rate package where the interest rate remains fixed for
the first two years, after which a floating rate will take effect. The current
rate on the short-term fixed package is 2.38% p.a. The third and fourth rate
packages – the SIBOR-dependent and Variable rate package – also have similar
rates to offer. SIBOR-dependent rates are 3-month SIBOR+0.50% or 1-month
SIBOR+0.55% (customers can choose either of the two). The variable interest
rate stands at 1.25% p.a. for the first 2 years.

4. UOB Home Loan

UOB provides you with
financing of up to 80% of the value of the property or HDB flat you wish to
purchase. You can also get a bridging loan for a down payment if you’re
expecting payments from a flat/home you intend to sell.

UOB’s Private Home Loan
comes with three kinds of interest rate packages – fixed-rate, floating-rate,
or a combination. Under the fixed-rate package, the rate remains fixed for the
first two years.

Currently UOB has a
promotional interest rate running. The fixed-rate package starts from 1.58% for
the first couple of years, following which you the rate will be FDP+1.43%. FDP
is the internal benchmark that UOB uses, based on its fixed deposit interest
rates. The current FDP rate is 0.25% p.a.

Citibank offers you a
rate of SIBOR+0.7% p.a. on your home loan, again, a low rate of interest in
comparison to most banks in Singapore. You can choose from a 1-month, 3-month,
6-month and 12-month SIBOR-adjusted interest rate when you pick Citibank for
your mortgage loan.

Note that if you wish
to apply for a mortgage loan from Citibank, the minimum requested loan amount
should be S$750,000 (i.e. if you apply for the loan online).

A quick recap :

Bank

Fixed Interest Rate Package

Variable/Floating Interest Rate Package

SIBOR-Linked Package

HSBC

●1.52% p.a. for the first
two years.

●SIBOR+0.75% for third
year and SIBOR+1.0% subsequently

●SIBOR+0.52% for the first
two years and SIBOR+0.75% henceforth for a loan amount of S$800,000 or more

●SIBOR+0.52% for the first
two years and SIBOR+0.75% thereafter for a loan amount of S$200,000 or more
(lesser than S$800,000)

Same as floating rate
package.

DBS

●1.68% for the first three
years.

●FHR+1.55% subsequent to
the third year

●FHR9 (Fixed Deposit Home
Rate)+1.55% for the first three years

●Under the promotional
offer, first two years will be FHR9+1.07% p.a.

NA

UOB

●1.58% p.a. for the first
two years.

●Subsequently, FDP+1.43%

NA

NA

OCBC

●2.38% for the first two
years (this is a short-term fixed interest rate package)

●1.40% for the first year
and 1.50% thereafter

1.25% for the first two
years

3-month SIBOR+0.5% for
the first year or 1-month SIBOR+0.55% for the first year

What's your mortgage like?

Hello!

You can call me Dawn, and this little space on the Internet is where I write about becoming financially-free. Join me as we learn more about savings, budgeting, paying off debts, insurance and investing together!

Awards (World's Best Blogs)

People Reading This

Search This Blog

Shh! Sometimes I send out secret tips via email.

Get exclusive finance hacks!

* indicates required

Email Address *

First Name *

Featured post

Get new posts in your email

Get In Touch

Organic Skincare by

NUFFNANG BLOGGERATI

Best Credit Card Promos

Meet Budget Babe

sgbudgetbarbie@gmail.com

Disclaimer

Please note that all statements published on this blog are solely opinions of my own i.e. of a personal nature, and should not in any way be taken as statements of fact. Readers are encouraged to do their own research before arriving at any conclusions based solely on materials provided, or republished, on this blog.